Vernon Industries sells merchandise to dealers on a consignment basis. Shipping costs are chargeable to Vernon, although in some cases, the dealer pays them, while advertising costs are reimbursable from the consignor. The selling price of the merchandise averages 40% above cost of merchandise, exclusive of freight. The dealer is paid a 10% commission on the sales price for all sales made. All dealer sales are made on cash basis. The following consignment sales activities occurred during the current year. Units shipped 100 Unit cost P10,000 Freight cost incurred: Paid by Vernon 75,000 Paid by consignee 25,000 Advertising costs paid by consignee 50,000 At the end of the month, the consignor receives a notification from the consignee that 80 units were sold and that the amount due to consigner is enclosed. REQUIRED: Value of inventory in the hands of the consignee Net income to be reported by the consignor Amount remitted to the consignor
Vernon Industries sells merchandise to dealers on a consignment basis. Shipping costs are chargeable to Vernon, although in some cases, the dealer pays them, while advertising costs are reimbursable from the consignor. The selling price of the merchandise averages 40% above cost of merchandise, exclusive of freight. The dealer is paid a 10% commission on the sales price for all sales made. All dealer sales are made on cash basis. The following consignment sales activities occurred during the current year.
|
Units shipped |
100 |
|
Unit cost |
P10,000 |
|
Freight cost incurred: |
|
|
Paid by Vernon |
75,000 |
|
Paid by consignee |
25,000 |
|
Advertising costs paid by consignee |
50,000 |
At the end of the month, the consignor receives a notification from the consignee that 80 units were sold and that the amount due to consigner is enclosed.
REQUIRED:
- Value of inventory in the hands of the consignee
- Net income to be reported by the consignor
- Amount remitted to the consignor
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